Over the past few years, more and more companies have turned to outsource HR and payroll services. That’s because Human Resources is responsible for every facet of employee management, including recruiting, screening, hiring, training, paying, managing benefits, and managing employee complaints. Most smaller to mid-size companies don’t have the resources to set up an efficient and effective in-house HR department. In contrast, other companies may need extra help because they exceed internal capacity.
This article will cover the significant reasons why an organization should outsource HR and payroll services.
1. Save money with lower administration costs
Companies can significantly lower their prices when HR functions are outsourced. But this doesn’t stop them from focusing on their core business and customer-facing duties. In fact, research has shown that companies save over 20% of regular expenses compared to keeping all human resource functions in-house. Having the right service provider can also give you confidence in knowing that you have an expert handling all your HR functions.
2. Offer more services to employees
When you outsource your HR and payroll services, you are able to offer your employees more benefits and services than ever before, especially if you own a small business. HR experts typically work with multiple clients, which provides the advantage of opening you and your employees up to additional perks that you otherwise would not have had.
3. Happier employees
If you have an in-house HR team, you may wonder why you should outsource HR and payroll services. The main reason is that HR is specialized and extensive. Even companies with HR professionals find outsourcing necessary because rules and laws are constantly being updated and changed. Outsourcing also ensures that problems are not felt in other aspects of the business and can help keep your internal employees happy by focusing on things they are interested in. Research from Oxford University shows employees are more productive when they are happy, which allows the business to achieve objectives more quicker.
4. Minimizing and managing risk
There are several areas where organizations can work to mitigate risk through outsourcing, with one of the main areas being employment and labor law. Employment and labor laws are constantly changing, and remaining up-to-date on the latest regulations can be burdensome. Outsourced HR and payroll service professionals must stay on top of changing federal and state employment laws and help businesses comply with new rules to avoid lawsuits. They can also adapt company policies and practices, so your business is able to keep up with the constant changes that come from the government.
5. Streamlining HR and payroll capabilities
While this may seem like a no-brainer, outsourced HR and payroll service specialists come to your business with an open mind. This gives them a unique perspective to help streamline or catch problem areas in HR and payroll that have been happening. It could involve something as small as new ways of keeping your records up-to-date or digitizing all of your paperwork so that employees, managers, and board members are just one click away from anything they might need.
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